The Art of Contrarian Trading: How to Profit from Crowd Behavior in the Financial Markets

by Carl Futia

Why is it so hard to beat the market? How can you avoid getting caught in bubbles and crashes? You will find the answers in Carl Futia’s new book, The Art of Contrarian Trading . This book will teach you Futia’s novel method of contrarian trading from the ground up. In 16 chapters filled with facts and many historical examples Futia explains the principles and practice of contrarian trading. Discover the Edge which separates winning speculators from the losers. Find out how to apply the No Free Lunch principle to identify profitable trading methods.  Learn about the wisdom and the follies of investment crowds – and how crowds are formed by information cascades that drive stock prices too high or too low relative to fair value. Discover the power of your Media Diary - and how to use it to spot these information cascades, measure the strength of the crowd’s beliefs, and decide when the crowd’s view is about to be proven wrong. You will watch Futia apply these principles of contrarian trading to navigate safely and profitably through the last 26 tumultuous years of roller coaster swings in the U.S. stock market – a time during which Futia kept his own media diary and developed his Grand Strategy of Contrarian Trading.  See how this Grand Strategy worked during the Great Bull Market of 1982-2000. Watch the Contrarian Rebalancing technique in practice during the dot.com crash of 2000-2002. Find out when the Aggressive Contrarian Trader bought and sold during the bull market of 2002-2007. Read about the causes of the Panic of 2008 and ups and downs of contrarian trading during that dangerous time. Futia shows you how the market turning points during the 1982-2008 period were foreshadowed by magazine covers and newspaper headlines that astonishingly and consistently encouraged investors to do the wrong thing at the wrong time. By monitoring crowd beliefs revealed by news media headlines – and with the guidance provided by the many historical examples Futia provides – a trader or investor will be well-equipped to anticipate and profit from market turning points.

Genres: Finance, Ebooks

240 pages, Hardcover

First published June 3, 2009

Reviews

[erjan avid reader · Rating 3 out of 5]

I wish the author included actual shots of headlines, magazine covers, cuz plain text does not quite convey the emotions of crowds at that time.

I find that the advice not to believe magazine covers is exactly what Jesse Steine from "insider buy superstocks" told to do: he actually put news headlines on top of charts and I could see easily how the media is bunch of BS and they call to buy when I should sell and vice versa.

This approach is for investors, not traders like me. But I gained valuable insight into what contrarian trading consitutes: you collect data, the diary to make decisions as to what crowd is gaining power, you assess the age of this crowd and try to go against them. As they collapse, they start a micro bearish\bullish cycle that contrarian investor can benefit from.

[Sjors · Rating 2 out of 5]

After my brush with “the triumph of contrarian investing”, I had low expectations of this work. However, the first couple of chapters of were genuinely riveting. Unfortunately, even this clear-headed foray into contrarian investing (inevitably?) bogs down into hand waving argumentations. I cannot fault the author for his hard work, but when all is said and done, the contrarian argument is still as weak as the middle-of-the-road pundit’s argument. Issa coin toss. Arguments brought up here do not demonstrate why active trading beats passive (index) strategies, which is a shame since my own strategies are all about active (but not too active) zigs and zags…